Capital Accumulation Plan (CAP) Guidelines

CAP Guidelines Overview

• Issued in March, 2005 and effective December 31, 2005;
• Developed to:

1. clarify the rights and responsibilities of the key parties of a CAP
2. ensure members are provided with the necessary information and assistance to make investment decisions;

• Provides an overview of the roles and requirements of the key parties;
• Defines a CAP as a tax-assisted investment or savings plan that permits its members to make investment decisions among two or more options offered within the plan;

The Key Parties of a CAP

• Sponsors – any employers, trade unions, associations or a combination of these entities that establish a CAP;
• Service Providers – any providers of services or advice required by a sponsor in the design, establishment and operation of a CAP;
• Members – any individuals who hold assets in a CAP.

Sponsor Requirements

Once a CAP is established, sponsors have responsibilities in relation to the CAP and its members. Generally, these responsibilities encompass:

• Establishing a CAP;
• Providing investment information and decision-making tools to CAP members;
• Introducing the CAP to potential members;
• Providing ongoing communications to members;
• Maintaining the CAP (ongoing monitoring and review);
• Ensuring the termination of the CAP or its individual members meet the CAP’s terms and conditions.

Although sponsors may delegate responsibilities to service providers, they maintain a requirement to review their service providers on a regular basis against criteria they have established. Responsibilities often include the management and administration of investment options and the provision of educational materials and decision making tools.

Sponsors may also select a service provider who assists members within the investment decision-making process by providing investment advice. Although not required, the guidelines recommend that CAP members who are not provided with advisory services should consider obtaining investment advice from a qualified individual in addition to using the information and tools provided by a sponsor.

Plan Member Requirements

Individual members of a CAP are responsible for:

• Educating themselves about the investment options;
• Making investment decisions within the plan;
• Deciding how much to contribute to the plan;
• Choosing how to allocate contributions to the various investments available;
• Reviewing and evaluating investments on an ongoing basis.

If advice is not provided by the plan, the guidelines suggest members should obtain investment advice from a qualified individual in addition to using any information or tool provided.

Service Provider Requirements

If responsibilities are delegated to a service provider, the service provider is responsible for following the guidelines and any applicable legal requirements.